The policy of so-called dynamic pricing began in 1980, when airlines began to have control over ticket prices. The practice known as dynamic pricing makes us compete among customers and makes consumers angry or happy. In a way, when there is a large number of customers, the company plays with what it thinks they are willing to pay to obtain its service or product, and that unleashes our feeling of competition, anger or joy for getting a good deal. It is an increasingly common system in online shopping. On the other hand, happy hour is the traditional way of offering a variable price, in this case more affordable, in restaurants. This old practice allows the establishments to fill up during off-peak hours at the expense of reducing the profit margin. It works because, basically, it is a more stable system than dynamic pricing: consumers know the rules of the game before starting (they are aware of what time it ends) and they do not get unpleasant surprises.
Will dynamic pricing that varies by time of day be coming to our restaurants?
The possibility of a portion of rice costing between 10 and 25 euros depending on when it is consumed is looming
Would it be acceptable to pay eight euros for a pizza at lunchtime and 22 euros at night? Or for a portion of rice or a pan to cost ten euros at off-peak times, but go up to 25 euros at peak times? This is what a popular American restaurant chain has considered doing, a live pricing system that makes prices vary according to demand at the time, as happens in so many commercial areas. Although it may seem that everything has already been invented, these types of experiences show us that there is room for innovation and that, sometimes, it is just a matter of giving a little twist to what has always been done to generate new scenarios. This is what the fast food chain Wendy's will do, which some time ago announced that the price of one of its iconic hamburgers, the Dave's Double, could double depending on the time of day. Algorithms will allow prices to be changed automatically and, to make matters worse, this entire system will be governed by artificial intelligence, which will be responsible for enabling changes in the menu, which is known as algorithmic dynamic pricing.
A common practice
In fact, this pricing policy is not so foreign to us, since we are very used to paying for a cheap flight when it leaves at five in the morning to avoid it costing four times more than the one during rush hour. The same occurs in other areas of tourism, such as hotels: everyone accepts that a standard double room costs more than 200 euros in August or during Easter, when demand is at its highest, but they would not be willing to assume that cost on a weekday in the low season. Also, trips by private transport, such as Uber, or house rental companies, such as Airbnb, use this same logic: the greater the demand and the rush hour, the higher the cost must be assumed. All modern inventions seem to have adopted this way of charging that tells us between the lines: "If you want it when everyone wants it, you pay for it." Likewise, companies in the world of leisure do so, such as ticket sales, which change prices depending on demand, or fashion companies in e-commerce. In a more everyday setting, this is the parameter for generating electricity bills: by accumulation or not of demand. Even, this is what happened in the last year with olive oil: high demand and scarce supply made prices skyrocket. This is, in fact, the backbone of the law of the market: the law of supply and demand.
In the case of Wendy's, according to the specialized media, Nation's Restaurant News, the company's CEO, Kirk Tanner, explained that starting this year 2025, they will begin testing dynamic pricing in their establishments. This change will involve an investment of 20 million dollars to put digital menu counters in all their establishments that allow this transformation. After this announcement, there are media such as The Guardian They predict that this will surely be closely followed by other catering and service companies in general, not just in the fast food sector. And, in fact, it is not difficult to imagine a McDonald's or a restaurant in a tourist location implementing this policy in the near future.
A reality in America
The owner of the restaurant Rooster & Bubbles, Marc Martínez, points out that in the United States, the dynamic pricing model in some restaurants is already a reality and it is a model that works and benefits the customer, when it works on the downside. For example, he cites the case of a restaurant that usually has a tasting menu for 200 euros for dinner at 9 pm on a Saturday, while at 5 pm it is offered at 175 euros: "An obvious benefit for those customers who are willing to dine early," he points out. For him, this allows the restaurant to accommodate more customers during a service or a day. On the other hand, in his opinion, the fact that a restaurant increases prices when the product and service are exactly the same, without justification, "is only seeking to take advantage of high demand." And, in his opinion, this "is only possible in a monopoly or in a sector with very few companies to satisfy this high demand." In his opinion, the system is fair when the price is cheaper, since the customer has "an additional option", either for the time of day or the day of the week, and can choose. However, he considers the increase in prices at a time of high demand to be unfair, since the product, service and value given to the customer is the same (or should be) as at a time of low demand.
It is not, in fact, so innovative
For Martínez, this is a good system and one that, in fact, already works in Spain. As he points out, this already happens through platforms such as The Fork, or with the fact that restaurants can offer discounts of up to 50% at certain times. We also find it in the world of home delivery, where there are restaurants that can carry out promotions at times of low demand, which helps product rotation, efficient use of staff and keeping kitchens in constant movement. For all these reasons, its possible implementation in restaurants in our country could become a reality.
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With prices falling
According to Martínez, this could happen soon, "especially in a downward direction": that is, offering a cheaper price on a Monday and not on a Saturday. "It is another way of attracting a more price-sensitive public," he believes. And he predicts that soon restaurants will be able to charge more or less depending on whether the table has a view or not, or if it is a table close to the kitchen and with noise. "Dynamic prices are very close and the customer will be able to choose whether to spend more or less and what their preference is," he adds.
In this sense, Martínez imagines a near future in our country in which prices are lowered in any establishment, from fast food restaurants (a hamburger joint) to restaurants with three Michelin stars, as has already been happening in the United States for years. For his part, he predicts a price increase only in exclusive restaurants, with waiting lists, and which have a clientele that is not very price-sensitive. "While lowering prices has no limits and is beneficial for the customer, raising prices must have a very clear ceiling for the customer, who must be able to perceive the value of that product or service at all times," he warns.
The shift system
Another way that the hospitality industry has of making more money and increasing turnover is through shifts, a system to double the use of tables at the expense of the time spent by the clientele. For Martínez, these put a lot of pressure on the client and do not fit with our customs or culture, "especially with the schedules in summer, with having after-dinner conversations." However, he also points out that the pressure of shifts is also suffered by the restaurant itself, for not exceeding the established time or making mistakes, for example. "In my experience and opinion, shifts seek the profitability of the restaurant and not the satisfaction of the client, and the objective of a restaurant is none other than that the client leaves happy," he says.
